The number of Americans 65 and older who continue to work has risen in the past decade. The unexpected rise can be traced to a variety of factors, including shell-shocked retirement accounts, falling interest rates on savings tools, fewer company pension plans, and the inability to save.

Many of these people have raced to take part-time employment, and baseball spring-training facilities are a prime example. There were seniors selling tickets, programs, hot dogs and popcorn, plus acting as ushers and parking lot directors in nearly all of the recently completed Cactus and Grapefruit League games.

The goal of this age cohort is to supplement their Social Security payments and portfolio securities (such as 401(k) and individual retirement accounts) so that they won't run out of money before they die. What other sources might be available?

Barry H. Sachs, a real estate tax attorney in San Francisco, and Stephen R. Sachs, professor emeritus in economics at the University of Connecticut, researched ways to further enhance a senior's finances by adding home equity via a reverse mortgage. In a recently published study, the authors found that a reverse mortgage can be powerful tool when used within a coordinated strategy rather than a "last resort" after exhausting the securities portfolio.

The model shows that the retiree's residual net worth (portfolio plus home equity) after 30 years is about twice as likely to be greater when an active strategy is used than when a conventional strategy is used.

"It's so important that financial planners have begun to ask the question about what's possible with reverse mortgages," said Martin J. Taylor, president of Bellevue, Wash.-based Stay In-Home, a reverse mortgage lender. "While they have often been known for solving desperate situations, they have a variety of uses in long-term financial planning."

What Sachs and Sachs have done is to compare three strategies for the use of home equity via a reverse mortgage to increase the safe maximum initial rate of retirement income withdrawals. The commonly accepted "safemax" begins with a first year's withdrawal equal to 4-4.25 percent of the initial portfolio value. Subsequent years' withdrawals then continue at the same dollar amount each year, adjusted only for inflation. Since many retirees have found the safemax uncomfortably limiting, Sachs and Sachs calculated greater percentages in some examples.

The strategies:

(1) The conventional, passive strategy of using the reverse mortgage as a last resort after exhausting the securities portfolio.

(2) A coordinated strategy under which the credit line is drawn upon according to a formula designed to maximize portfolio recovery after negative investment returns.

(3) Drawing upon the reverse mortgage credit line first, until exhausted.

The authors found "substantial increases" in the cash flow survival probability when the active strategies are used as compared with the results when the conventional strategy is used. For example, the 30-year cash flow survival probability for an initial withdrawal rate of 6 percent is only 55 percent when the conventional strategy is used, but is close to 90 percent when the coordinated strategy is used.

So, how is the reverse mortgage best blended together with other investments? In a nutshell, it's a basic algorithm:

At the end of each year, the investment performance of the account during that year is determined. If the performance was positive, the next year's income withdrawal is from the account. If the performance was negative, the next year's income withdrawal is from the reverse mortgage credit line.

According to the study, this spares the account any drain when it is down because of its investment performance. It also leaves the account more assets to recover in subsequent up years. This is done in the early years of retirement, so the account grows before the reverse mortgage credit line is exhausted.

The authors emphasize that a reverse mortgage is not necessarily a useful vehicle for every retiree who has substantial home equity. A retiree whose primary source of retirement income is a securities portfolio and who also has substantial home equity must decide early in retirement whether to live within the safemax limit set by his or her portfolio. This decision is a fundamental component of overall retirement planning.